SDA housing offers long-term tenancies and stable rental returns, but there are a number of important considerations to keep in mind before making any investments. SDA housing investment is a new sector, and it can be easy to fall prey to misleading claims from people who are eager to capitalise on the momentum of this emerging market.
According to a recent survey by Summer Foundation and JBWere, SDA investment best suits “sophisticated investors with substantial portfolios looking to diversify their investments and are interested in both financial return and social impact.” However, the survey found that it can be difficult for investors to connect with people with disability who need SDA housing.
Investors should also be aware that SDA investments are not government-backed and may not provide guaranteed or secure returns. The National Disability Insurance Agency only provides funding for SDA housing for participants who meet certain criteria, including extreme functional impairment and high support needs.
SDA housing is designed to offer a range of modifications and accessibility features to assist with daily living. These can include accessible entry, wide doors and windows, ramps, and specialised toilets and showers. It can be a single standalone dwelling, an apartment or a group home. It can also incorporate a range of specialist access equipment, such as wheelchairs and electronic lifts.
While the SDA market has been growing, it is still not delivering enough homes to meet demand. Only 3,000 SDA homes have been built or are in the pipeline, which is far short of the 12,000 people who require them. Although SDA investment through the Synergis Fund has gone some way to addressing this shortfall, a significant amount of additional capital is needed.
Investors who are interested in SDA housing investment should research the market and select a suitable location and design. They should also consider the suitability of the property for SDA tenants, and conduct thorough due diligence on potential tenants. The investor should also understand how SDA housing can be converted to a regular residential property if they decide to sell the property in future.
In addition to these factors, investors should understand the costs associated with SDA housing and their tax implications. SDA housing is a new and untested asset class, and as such, it can be vulnerable to regulatory risk (the risk that the Government changes its policy supporting SDA). This risk should be taken into account when calculating your investment return. However, if the regulatory risks are managed appropriately, SDA investment can be a great addition to your portfolio.
